) ) Arthur Furtado Pereira Applicant – v. –, 2013 ONSC 1158

CITATION : Pereira v. Quatsch, 2013 ONSC 1158 COURT FILE NO.: 14-2013 DATE: 2013-02-21 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: ) ) Arthur Furtado Pereira Applicant – and – Ryan Quatsch Respondent ) ) ) ) ) ) ) ) ) R. Paul Hosack, for the Applicant Bhupinder Nagra, for the Respondent ) ) HEARD: February 20, 2013 THE HONOURABLE MR. JUSTICE D.A. BROAD reasons for judgment Background [ 1 ] This application deals with the validity of a caution registered on title and the test to be utilized in determining whether the caution should be removed or allowed to continue. [ 2 ] The Applicant, Mr.

Pereira, is a Chargee of an agricultural property located in the Municipality of Townsend in the County of Norfolk, municipally known as 140 Woodley Road (the “Property”) pursuant to a Charge/Mortgage of Land registered on January 24, 2011. Due to the default of the Chargor in June 2011, Mr. Periera commenced Power of Sale Proceedings and listed the Property for sale in December 2011 or January 2012. [ 3 ] On November 19, 2012, Mr. Pereira entered into an Agreement of Purchase and Sale with the Respondent, Mr. Quatsch.

Although the Agreement stated that the closing date was to be December 14, 2013, the parties subsequently agreed in writing that the closing date was intended to be December 14, 2012 and agreed that that would be the closing date. The Agreement was not conditional on Mr. Quatsch obtaining financing for the purchase. [ 4 ] The parties agreed, by correspondence from Mr. Pereira’s lawyer and acknowledged and confirmed by Mr. Quatsch’s lawyer, to extend the closing date five times due to the inability of Mr. Quatsch to arrange financing. On each extension the purchase price was agreed to be increased and Mr.

Quatsch agreed to pay an additional deposit to be held in trust by the lawyers for Mr. Pereira. The final extended closing date was January 18, 2013. On each extension, the letter from the lawyer for Mr. Pereira, acknowledged and agreed to by the lawyer for Mr. Quatsch, after confirming the new closing date, stipulated that “all other terms and conditions will remain the same and time will remain of the essence.” [ 5 ] On January 16, 2013, the closing date was agreed to be extended to January 17, 2013, conditional upon Mr. Quatsch paying a further deposit of $15,000.00.

If that amount was paid by January 17, the closing date would be extended to January 23, 2013, and then extended further to February 15, 2013 upon payment of further additional deposits at stipulated times. [ 6 ] Mr. Quatsch was unable to provide the agreed additional deposit in the sum of $15,000.00 by January 17, 2013 and it was agreed that the closing date would be extended to January 18, 2013 to allow Mr. Quatsch to that date to pay the additional deposit. In the

acknowledged letter confirming the terms of the extension, the terms set forth in the letter dated January 16, 2013 from the lawyer for Mr. Pereira, including the stipulation that should Mr. Quatsch not complete payment of the stipulated additional deposits or to close on the extended closing dates of January 23 and February 15, 2013 respectively, Mr. Pereira would not be obligated to agree to any further extensions and would be entitled to retain the deposit funds. [ 7 ] On January 18, 2013, the lawyer for Mr. Quatsch advised the lawyer for Mr. Pereira that Mr.

Quatsch was unable to make the required deposit of $15,000.00 and that he was not in receipt of sufficient funds to complete the transaction. The lawyer for Mr. Pereira advised the lawyer for Mr. Quatsch that he viewed that as an anticipatory breach of the Agreement by Mr. Quatsch, bringing the Agreement to an end. He advised further that the property would be re-listed to secure another purchaser, that Mr. Pereria would look to Mr. Quatsch for any damages suffered as a result of the breach and that the deposits would be retained to offset a portion of the damages. The lawyer for Mr.

Quatsch acknowledged receipt of this correspondence. [ 8 ] On January 20, 2013 Mr. Quatsch caused his agent (not a lawyer but a conveyancing clerk company) to register a Caution against the title to the Property. The Caution stated that “the applicant [i.e. Mr. Quatsch] is entitled to register a caution against the land under an Agreement of Purchase and Sale dated 2012/11/17. The sale is to be completed 2012/02/15.” [ 9 ] Mr.

Pereira re-listed the Property for sale on January 21, 2013 and entered into an Agreement of Purchase and Sale with a third party on January 26, 2013, providing for a closing date of February 15, 2013. All conditions in that Agreement were waived and the new purchaser was ready willing and able to close on that date. [ 10 ] The lawyer for the new purchaser has requisitioned removal of the Caution. The closing has been extended to February 22, 2013, pending the disposition of this Application. [ 11 ] Notwithstanding a written request from the lawyer for Mr. Pereira, Mr.

Quatsch has refused to remove the registered Caution. [ 12 ] In his responding Affidavit Mr. Quatsch deposed that his lender, John Miam, advised him that he had spoken to the lawyer for Mr. Pereira and “that I did not need to pay the further deposit.” It is not clear from the Affidavit what deposit this was in reference to, but from the context it appears to have been after the agreement to extend closing to January 16, 2013. [ 13 ] He then deposed that he proceeded not to pay the deposit whereupon “the seller and their lawyer took the position that the agreement was terminated.” He went on to depose that Mr.

Miam “again further advised me that he had spoken to … the seller’s lawyer and that he was advised that despite his formal position he would still be amenable to close the transaction by February 15, 2013.” [ 14 ] Mr.

Quatsch stated in his affidavit that when he learned that the Property had been sold to another purchaser, “I had no choice but to protect my rights and I proceeded to register a caution on the basis that I was still entitled to close the transaction on February 15, 2013.” He had earlier deposed that “this is a unique and specific use property and I did not want to lose the property as I knew that I would not be able to secure another such property.” There is nothing in Mr. Quatsch’s affidavit explaining how the Property is unique and what its specific use is. [ 15 ] In his Reply Affidavit, Mr.

Pereira’s lawyer (also his son), Jamie Pereira, denied that he verbally agreed with Mr. Miam to extend the closing date to February 15, 2013. He related that he only spoke to Mr. Miam on one occasion when Mr. Miam called him on January 15, 2013. Jamie Pereira related the conversation in detail in his affidavit, including his advice that all of his dealings would be with Mr. Quatsch’s lawyer, Mr. Weir, and he did not know whether Mr. Pereira would agree to another extension of the closing date and he would have to get instructions from him. [ 16 ] During submissions counsel for Mr.

Quatsch produced an affidavit of Abdul Q. Mian, responding to Janie Pereira’s affidavit. I agreed to receive this affidavit over the objections of counsel for Mr. Pereira, reserving my decision on its admissibility and the weight to be given to it. He deposed that he spoke by telephone with Jamie Pereira on January 15, 2012 during which he advised that he was to be the second lender on the Property.

He deposed further that he specifically asked “if we could close the transaction on February 15, 2013, without any further deposits.” He stated that Jamie Pereira’s exact words to him were “that can be done.” He concluded his affidavit by stating “I am still prepared to funds [ sic ] the purchaser in order to close the transaction.” Issues [ 17 ] The issues on this Application are:

(1) What is the jursidiction of the Court on an Application seeking a declaration that the Respondent does not have any rights, interest or equities in the Property and for an Order directing the Land Register to delete the Caution registered by the Respondent, and what is the test to be applied in exercising that jurisdiction?

(2) Does the Respondent have any rights, interest or equities in the Property?

(3) Should the Caution be removed from title to the Property? Jurisdiction of the Court and the Test [ 18 ] The Application is brought under sub-Rules 14.05(3)(

d) and (

e) of the Rules of Civil Procedure which provide, in

summary,

that an application may be brought for a determination of rights that depend upon on the

interpretation of a contract or for a declarationof an interest in land. [19]

Section 128 and 129 of the Land Titles Act, R.S.O 1990, c. L.5 deal with cautions.

Scetion 128(1) provides that a personclaiming to have an interest in registered land may apply to the land registrar for the registration of a caution to the effect that no dealingwith the land shall be had on the part of the registered owner or other person named in the caution without the consent of the cautioner.Section 129(5) provides that the consent of a cautioner is not required where the dealing proposed is under the authority of a judgment ororder in a proceeding to which the cautioner is a party. [20] The Court of Appeal in the case of McLeod v. Castlepoint Development Corp. (ON CA), [1997] O.J.

No.386 (C.A.) held at para. 45 that a judge presiding on an application of this nature is entitled to finally decide the rights of the parties onthe merits so long as the principles which inform and define the parameters of a properly constituted application have otherwise been met. This decision was applied by Justice McMahon in the case of E.S. Fox Ltd. v. Nordaria Enterprises Inc. (2006) 46 R.P.R. (4th) 153(S.C.J.) at para. 11.

At para. 14, Justice McMahon stated that if an application judge is able to finally decide the rights of the parties onthe merits, he or she should do so, rather than directing a trial or converting the proceeding to an action.

In making that determinationconsideration should be given to the factors set forth in Fort William Indian Band v Canada, (ON SC), [2005] O.J.No. 2317 (S.C.J.) (referred to as “Collins”) including 1) whether there are material facts in dispute; 2)whether there are complex issuesrequiring expert evidence or a weighing of the evidence; 3) whether there is a need for the exchange of pleadings and for discoveries;and 4) the importance and impact of the application and the relief sought. [21] For the reasons set forth below, I am of the view that I am able to decide the rights of the parties on the merits based upon thecurrent record, and, on the authority of the cases cited above, I should do so. [22] Under section 128(1) of the Land Titles Act, the validity of the registration of the Caution depends upon whether the cautionerhas an interest in the registered land.

The question for determination is therefore whether Mr. Quatsch has such an interest. If he doesnot, the Caution should be ordered to be removed. If he does have such an interest, it may continue. That was the question dealt with byJustice McMahon in E.S. Fox (see para. 45). Does Mr. Quatsch have an interest in the registered title to the Property? [23] The claim of Mr.

Quatsch that he had a subsisting interest in the Property pursuant to the Agreement dated November 17,2012, with a closing date of February 15, 2013, as claimed in the Caution, is totally dependent on the existence of an enforceable oralagreement between Mr. Mian and Mr. Pereira, to further extend the closing date to February 15, 2013. [24] I find that there was no such enforceable agreement for the following reasons: 1) There is no evidence that Mr. Mian was acting as the agent for Mr. Quatsch on January 15, 2013 in negotiating an agreement toextend the closing date. In his Affidavit, Mr.

Mian stated that he advised Jamie Pereira that he was to be the “second lender” on theProperty. At no time did he represent that he was speaking for or acting as agent for Mr. Quatsch. Mr. Quatsch had legal counsel, Mr.Weir, acting for him on the transaction, who had negotiated each of the five documented extension agreements. There was no extensionagreement entered into between Mr. Pereira and Mr.

Quatsch, either personally or by their authorized agents; 2) The Agreement of Purchase and Sale stated at para. 26 that there was no representation, warranty, collateral agreement or conditionaffecting the Agreement other than as expressed therein. On each documented extension agreement, including the one dated January 8,2013, which preceded the conversation on January 15, 2013, it was specifically agreed that “all other terms remain the same”. Thiswould include para. 26, which excluded any oral terms of the agreement.

An oral agreement to extend the closing would thereforeoffend the parol evidence rule, as being inconsistent with the written terms of the Agreement, and accordingly, evidence of such anagreement would not be admissible (see Hawrich v. Bank of Montreal (SCC), [1969] S.C.R. 515). 3) In any event, the alleged extension agreement of January 15, 2013 was superceded by the documented extension agreementrepresented by the letter from Jamie Pereira, dated January 16, 2013 and acknowledged and agreed to by Mr. Quatsch’s lawyer, Mr.Weir.

Even if an oral agreement was entered into on January 15, 2013, it ceased to have any effect once the January 16, 2013 extensionagreement was entered into. [25] In light of the foregoing findings, it is not necessary to resolve any credibility issues respecting what was said during theconversation between Mr. Mian and Jamie Pereira on January 15, 2013. [26] On the basis of the advice by his lawyer that Mr.

Quatsch was not in a position to close on the closing date, as extended byagreement, and he was declared to have committed an anticipatory breach thereby, the Agreement of Purchase and Sale was therefore atan end. At that point, Mr. Quatsch no longer had any interest in the land which would support the registration of the caution. [27] Since Mr.

Quatsch has no interest in the Property it follows that the Land Registrar should be directed to delete the Cautionregistered on January 29, 2013 as instrument number NK59141 from the title to the Property, being all of PIN 50276-0236 in theRegistry Office for the Land Titles Division of the County of Norfolk. [28] A Declaration and Order shall therefore be granted in accordance with subparagraphs 1(

a) and (

b) of the Application Record. [29] The parties may make brief written submissions (not to exceed three double-spaced pages, not including Bills of Costs, Offers

to Settle and legal authorities) with respect to costs. The Applicant shall provide his submissions by March 11 and the Respondent by March 25, 2013. ____________________________________ D.A. Broad, J. Released: February 21, 2013 CITATION : Pereira v. Quatsch, 2013 ONSC 1158 COURT FILE NO.: 14-2013 DATE: 2013-02-21 ONTARIO SUPERIOR COURT OF JUSTICE Arthur Furtado Pereira – and – Ryan Quatsch REASONS FOR JUDGMENT D.A. Broad J. Released: February 21, 2013